Caterpillar CEO Sees Long-Term Demand for Minerals

The chief executive of Caterpillar Inc, the world's largest maker of earth moving equipment, says he is convinced that the long-term demand for minerals will grow.

"It's going to grow substantially because China, India, Southeast Asia, Latin America, all these emerging countries can't grow without minerals," Caterpillar chief executive James Owens told reporters on the sidelines of a CEO conference in Washington, DC, on Tuesday.

The company, a component of the Dow Jones Industrial Average and a US business bellwether, makes construction and mining equipment such as large bulldozers and mining trucks - machinery crucial to the resources industry.

However, the financial crisis and sharp fall in metals prices has forced several companies to abandon or put on hold their plans to bring new mines on stream. As well, some existing producers have shut down or curtailed output at mines and plants.

Despite the downturn, Owens said Caterpillar is comfortable with its 2008 outlook for profits of about $6 a share and revenues and sales of about $50bn. Owens said the company's outlook for next year was obviously being formed as it "looks at all the traumas going on in the global financial markets."

"We will adjust our capital plans and our employment plans based on the business opportunities that are out there," Owens said on the sidelines of the Wall Street Journal's CEO Council meeting. "We certainly are looking at and thoughtfully considering what the global mining industry is going to do with their investments next year."

Owens said "right now we have a strong order backlog" from the mining industry. But also said it remains to be seen how much the slowing growth and drop in commodity prices will impact Caterpillar.

Owens said he was confident that the company's in-house finance arm, which lends money to buyers of its construction and mining equipment, would be able to weather the financial storm.

"I think we have a very sound business model for (Caterpillar) finance," he said, adding that the company had no plans to seek capital from the US government's $700bn financial services rescue package.

The government has already funneled $110bn into the eight largest banks such as Goldman Sachs in a bid to restore the credit markets and confidence in the financial sector. Some companies with finance arms hope to receive capital injections from the US Treasury Department.

Overall Owens said the company was not so focused on acquisitions but said: "In any significant global downturn the strongest players tend to get stronger and I would expect that would be the case for us."

By Rachelle Younglai; additional reporting by James Kelleher in Chicago, Reuters.